Families and businesses in the U.S. are looking for green energy solutions to cut down their carbon footprint. Solar energy has quickly risen up to fill that void. However, one of the major challenges associated with solar energy is the cost of installation. Just a decade back, homeowners who wanted to go solar had to deal with costly and less efficient solar panels. Things changed in 2006 when the federal government introduced solar investment tax credit (ITC).
ITC encouraged people to make a smooth transition to solar without worrying about the installation cost. Coupled with falling solar equipment prices in recent years and various state-level tax credits, solar is now one of the safest investment opportunities for homeowners.
What the Solar Investment Tax Credit (ITC) means in 2021 and beyond
The ITC gave tax incentives to people who adopted solar energy. As a result, the solar adoption rate in the U.S skyrocketed in the last decade. Over the years ITC underwent multiple changes, mostly to tweak tax terms and extend the deadline. The Solar Investment Tax Credit has been updated once again which means home and business owners who are planning to install solar this year or in the future, need to know how ITC will impact their installation charges. The new ITC policy looks like this –-
- 2020-2022: Residential and commercial owners will get a tax credit of 26% on the installation cost
- 2023: Residential and commercial owners will get a tax credit of 22% on the installation cost
- 2024: Commercial owners will get a tax credit of 10% on the installation cost. 2024 onwards, residential owners will not be eligible for ITC.